HP halts TouchPad, looks to sell PC line

Hewlett-Packard Co. announced a string of big news on Thursday, in addition to its third-quarter earnings, and the market did not respond kindly.

The Palo Alto-based company (NYSE: HPQ) confirmed it is in talks to acquire Autonomy Corp. in a deal that could reach $10 billion, that it's discontinuing its TouchPad line and that it intends to spin off its PC business.

On a day of across the board market indices declines, HP shares closed down nearly 6 percent to $29.51. The company's stock has traded between $28.64 and $51.99 in the past 52 weeks.

HP maintains operations in Corvallis and Vancouver, Wash.

In a brief statement, HP said it is "in discussions with Autonomy regarding a possible offer for the company," but did not provide any details. According to Autonomy's website, the Cambridge, England-based firm makes software to help large companies parse through unstructured information such as text, e-mail or Web pages. It has a market cap of $7 billion.

In addition, HP said its board has "authorized the exploration of strategic alternatives for its Personal Systems Group," and added that it will consider options that could include "a full or partial separation of PSG from HP through a spin-off or other transaction."

As for its position in the hyper-competitive tablet space, HP reported that it plans to discontinue operations for webOS devices, specifically the TouchPad and webOS phones. "HP will continue to explore options to optimize the value of webOS software going forward," the company said.

The TouchPad went on sale last month and HP later cut $100 off the sale price. HP acquired its webOS mobile operating system when it paid $1.2 billion last year for Palm Inc.

The restructuring news came as HP reported an increase in earnings and revenue. In the third quarter, preliminary earnings per share were 93 cents a share compared to 75 cents a share a year earlier. Revenue rose to $31.2 billion from $30.7 billion.

Excluding certain charges, the company would have earned $1.10 in the third quarter compared to $1.08 a year earlier.

Analysts polled by Thomas Financial, whose estimates typically do not include such expenses, expected earnings per share of $1.09 and revenue of $31.9 billion.